Docebo(DCBO) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2021 grew to $27.1 million, an increase of 68% from the prior year [28] - Subscription revenue was $25.1 million, representing 93% of total revenue for the quarter and up 66% from the prior year [29] - Net ARR added in Q3 was $10.2 million, the highest ever for Docebo, with total ARR at $103.5 million, a 60% increase from $64.6 million in Q3 2020 [29][30] - Average contract value (ACV) increased to $39,000, up 23% from $32,000 at the end of Q3 2020 [30] - Adjusted EBITDA loss was $2 million for Q3 2021, compared to income of $0.6 million in the prior year [39] - Free cash flow was negative $1 million in Q3, with a healthy balance sheet showing net cash and cash equivalents of $216 million [40] Business Line Data and Key Metrics Changes - Professional services revenue in Q3 was $2 million, an increase of 102% from the prior year [29] - ACV from new customers grew to approximately $59,000 compared to approximately $46,000 in Q2 2021 [30] - Nearly half of new logo business in Q3 came from contracts over $100,000 in ARR, with a significant increase in larger enterprise deals [10][31] Market Data and Key Metrics Changes - The retail and biotech sectors showed strong performance, with notable partnerships including Neiman Marcus and Smiths Medical [13][14] - The company is seeing broad-based growth across customer verticals, with a notable increase in enterprise deals [9][31] Company Strategy and Development Direction - The company continues to focus on solving both internal and external use cases, with a strategy that emphasizes hybrid use cases [11] - New product launches, including Docebo Learning Suite, are expected to drive future growth, although the core Learn LMS platform remains the primary growth driver [17][20] - The company is investing in expanding its partnership program and geographical reach, with plans for further growth in 2022 [23][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong sales pipeline and the ability to continue growing revenue organically [41] - The current labor market challenges are driving demand for LMS solutions to improve employee retention and customer engagement [62] - Management noted that the company is well-positioned to capitalize on the growing need for comprehensive learning solutions across various industries [60] Other Important Information - Docebo was recognized for its CSR efforts with the 2021 Tech Cares Award from TrustRadius for empowering women in technology [24] - The company is committed to fostering a culture of diversity, equity, and inclusion within its workforce [25] Q&A Session Summary Question: Can you break down the enterprise growth seen this quarter? - Management noted that the product's maturity and ability to solve multiple use cases are driving higher ARR and revenue, with a focus on hybrid use cases [43] Question: How is the sales approach for the learning suite structured? - The company aims to build trust with customers before upselling additional products, focusing on the core Learn product as the entry point [44] Question: What is the structure of the cross-sell agreement with the e-commerce customer? - Management indicated that they are bound by confidentiality but emphasized the importance of understanding customer needs across multiple business units [46] Question: Are the enterprise deals primarily displacing incumbents or are they greenfield opportunities? - Management confirmed that displacement is common in the enterprise segment, but many larger organizations are still underserved in their learning needs [49] Question: What is driving the increase in enterprise deals? - Management attributed the increase to brand recognition, intentional investment in the enterprise segment, and the growth of existing customers into larger accounts [51] Question: How is the OEM partnership performing? - Management expressed satisfaction with the performance of OEM partners, noting that patience in building these relationships is key to long-term growth [76]